Rubach; Secretary, Department of Social Services and (Social services second review) - [2024] AATA 3561

Rubach; Secretary, Department of Social Services and (Social services second review) [2024] AATA 3561 (9 October 2024)
Division: General Division
File Numbers: 2023/8701 and 2023/8705
Re:Secretary Department of Social Services
APPLICANT

AndJanelle Rubach
RESPONDENT

DECISION
Tribunal:Member P Ranson
Date:9 October 2024
Place:Brisbane

DECISION
Pursuant to section 43(1)(c)(ii) of the Administrative Appeals Tribunal Act 1975 (Cth), the Tribunal sets aside the decision under review and in substitution finds the following are recoverable debts due to the Commonwealth:
(i) Family Tax Benefit in the amount of $2,423.22 for the 2016 – 2017 financial year;
(ii) Family Tax Benefit in the amount of $11,562.22 for the 2017-2018 financial year;
(iii) Child Care Benefit of $1,625.33 for the 2017-2018 FY;
(iv) Family Tax Benefit in the amount of $14,426.86 for the 2018-2019; and
(v) Parenting Payment Partnered in the amount of $41,890.70 for the period to 19 August 2015 to 19 November 2019.
...................................[SGD]......................................
Member P Ranson

Catchwords
Where Respondent’s Parenting Payment Partnered was cancelled from 1 July for under reporting of combined income – Where family tax benefit and childcare benefit was cancelled as a result – where received benefits had separate reporting requirements – where Respondent agrees there is a debt to the commonwealth – whether Tribunal should exercise discretion to write-off or waive the debt – where no reason to write off or waive debt
Legislation
Administrative Appeals Tribunal Act 1975 (Cth)
A New Tax System (Family Assistance) Act 1999 (Cth)
A New Tax System (Family Assistance) (Administration) Act 1999 (Cth)
Social Security Act 1991 (Cth)
Cases
Archer-Morris and Secretary, Department of Education, Employment and Workplace Relations [2008] AATA 4
Dauguet and Secretary, Department of Employment [2017] AATA 1554
Davy and Secretary Department of Employment and Workplace Relations [2007] AATA 1114
Gizycki and Secretary, Department of Social Services [2015] AATA 38
Kirov and Secretary, Department of Education, Employment and Workplace Relations [2011] AATA 50
Paoli and Secretary, Department of Social Services [2021] AATA 1703
REASONS FOR DECISION
Member P Ranson
9 October 2024

Ms Rubach was receiving Family Tax Benefit (FTB) during the financial years from 2016/17 to 2018/19 and Child Care Benefit (CCB) in the 2017/18 financial year.[1] She had been receiving FTB since 2000 and Parenting Payment Partnered (PPP) from 2015. Receiving social security benefits brings with it the obligation to report earnings. Some reporting is done fortnightly and some annually and for each benefit there may be different reporting requirements.
[1] Child Care Benefit was replaced by Child Care Subsidy from 2 July 2018.
One of the frustrations for customers dealing with Centrelink is reporting for one benefit type does not necessarily discharge their reporting obligations in relation to other benefit types. To be safe, recipients should report separately for each benefit they receive. Centrelink issues notices to remind their customers of their reporting obligations and usually changes must be notified within 14 days of actual or deemed receipt of the notice.
During the relevant years, Ms Rubach’s partner started a business and the reporting of the income from that business added a complication to her reporting obligations.
Ms Rubach said at the hearing she always knew separate reporting was required for the benefits she received, and she did so either online or by attending a Centrelink office. There is no doubt Ms Rubach reported her income to Centrelink. The question is whether that reporting was accurate and timely for each benefit she received.
The issues for the Tribunal are:
(a)whether Ms Rubach received social security and/or family assistance payments which she was not entitled to;
(b)how much was she overpaid (if any);
(c)whether those overpayments are debts due to the Commonwealth; and
(d)whether all or part of the debts may be written off or waived.
For the following reasons, the Tribunal sets aside the decision under review and in substitution finds the debts for FTB, CCB and PPP raised by Centrelink are due to the Commonwealth and are recoverable.
THE LAW
1.The legislation referred to this decision includes:
a.A New Tax System (Family Assistance) Act 1999 (Cth) (the Act);
b.A New Tax System (Family Assistance) (Administration) Act 1999 (Cth) (the Administration Act); and
c.The Social Security Act 1991 (Cth) (the Act).
WHAT HAPPENED
The Secretary’s Statement of Issues, Facts & Contentions (ASFIC) sets out in detail the chain of events which led to the creation of the debts,[2] which are the subject of this review. The Secretary says the debts arose because the income of Ms Rubach’s partner’s business was not reported, which means their combined income was under reported. Ms Rubach does not dispute the calculation of the debts rather she claims special circumstances apply and the debts should be waived because she did report her partner’s income and Centrelink failed to use that information in its calculations.
[2] SFIC, paragraphs 3 to 30.
Parenting Payment is a taxable Centrelink payment therefore PPP is taxable income. The amount of PPP payable depends on the amount of income and assets of the recipient and their partner. The ASFIC at paragraph 3 says:
‘The Respondent has been in receipt of FTB from 1 July 2000 and PPP from 24 June 2015. From 24 June 2015 to 30 June 2019, the Respondent was paid the maximum rate of FTB Part A as she was in receipt of PPP.’
This statement implies the income reported by Ms Rubach during this period was less than the income test threshold for PPP. In her response to the ASFIC dated 17 June 2024 (RSFIC), Ms Rubach does not challenge this statement, so the Tribunal takes it as agreed by her.
Centrelink uses adjusted taxable income (ATI) to work out a person’s eligibility for some payments, concessions or services such as FTB. ATI starts with taxable income as reported to the Australian Taxation Office (ATO) and adds other items like reportable fringe benefits. Taxable income includes business income such as the business operated by Ms Rubach’s partner. PPP and CCB come with obligations to report within 14 days of any actual or likely the change in circumstances.
The amount payable of FTB Part A depends on family income and where that fits in certain bands of income. From 1 July 2016 to 30 June 2019 the higher income free area (HIFA) was static at $94,316 and the lower income free area (LIFA) ranged from $51,903 to $53,728.[3] The maximum rate of FTB Part A is payable where family income is less than the LIFA. The rate of FTB Part A is reduced by 30 cents for each dollar of income over the HIFA until the payment is nil.
[3] Family Assistance Guide 3.6.1 – FTB Part A – historic rates.
Suffice to say, a reconciliation of her combined family income was carried out by Centrelink and on 22 November 2019 her PPP was cancelled from 1 July 2016 because of the under reporting of her and her partner’s combined income. The cancellation of the PPP meant her FTB and CCB benefits were subject to income testing.[4] Again, she had been overpaid these benefits, which resulted in debts being raised for FTB and CCB.
[4] Section 38L of the Act.
The debts raised were:

Year/Period Benefit Debt ($)

2016/17 FTB 2,423.22

2017/18 FTB 11,552.22

2017/18 CCB 1,625.33

2018/19 FTB 14,425.86

19-08-2015 to 19-11-2019 PPP 49,377.86

The FTB and CCB debts for the 2016/17 and 2018/19 years were waived by the Social Services and Child Support Division of the Administrative Appeals Tribunal (AAT1) under s 97 of the Administration Act. The PPP debt was waived under s 1237A of the Act. The Secretary seeks a second review of the decision to waive the above debts owed to the Commonwealth.
Section 97 of the Administration Act and Section 1237A of the Act provides for waiver of a debt arising from a sole administrative error by Centrelink. The various conditions are discussed later in this decision.
The Tribunal finds the debts raised by Centrelink as set out above are correct because Ms Rubach does not dispute them and there are no special circumstances to enliven a discretion to waive the debt owing. As such the benefits that were overpaid to Ms Rubach are debts due to the Commonwealth.
Reported income v declared income
According to the ASFIC, the discrepancies between actual income and reported income were substantial. The ASFIC at [5]-[19] sets out examples of letters sent to Ms Rubach advising her of her family income for FTB purposes as understood by Centrelink and the actual income as shown on tax returns lodged including for PPP. One of those examples concerns the 2017/18 financial year. On 8 May 2017, Centrelink wrote to Ms Rubach advising their indexed family income for FTB purposes was $103,125. Then on 31 August 2017 they wrote again about her family income for PPP purposes, which curiously recorded her FTB income as $72,800.[5] At the hearing, Mr Dube showed this to the Tribunal and Ms Rubach said she did not know where Centrelink got that income figure from. That doesn’t matter because it was her responsibility to contact Centrelink and point out the error if that amount was incorrect.
[5] T5, page 171.
Ms Rubach’s response is set out in the RSFIC where she comments on the unusual movements in the amounts recorded by Centrelink. She reiterates she felt she had met all the reporting requirements and was doing everything she was requested to do as best she could. It seems however she did not draw her concerns about unusual movements in the amounts reported to her by Centrelink to their attention, that is, she did not seek to challenge them rather accepted what they reported in the letters they sent to her.
The submissions from both parties do not make it clear if personal income tax returns for Ms Rubach were lodged for each financial year from 2016 to 2019. The submissions include copies of the returns for her partner, which appear to have been lodged within five months of the end of each financial year. Possibly Ms Rubach did not have sufficient taxable income to warrant lodging a tax return however had she done so, that may have enabled the discrepancies in reporting of income to be detected on a timely basis.
What does Ms Rubach say?
As the Tribunal understands her position, and as Ms Rubach said repeatedly at the Hearing, she relied on the reporting she made to Centrelink for FTB purposes and in her view, the failure of Centrelink not to pass across the reported income information for PPP purposes or to contact her when discrepancies were discovered, is the cause of the debt. The income reporting for PPP is a forward estimate based on ATO data of one’s taxable income, whereas the reporting for FTB and CCB is actual income either fortnightly or annually.
On 1 March 2024, Ms Rubach sent an e-mail to the Tribunal and the representative of the Secretary setting out the issues she says should be considered in her case for waiver of the various debts. These issues are:
1.My conscientious reporting of my income.
2.The fact that I have paid back approximately $51,282 which has meant our family has had to go without discretionary expenditure such as any holidays.
3.The four-year delay in Centrelink alerting me to the error and raising the debt.
4.The fact that I was oblivious to the error or that I was being overpaid.
5.My lack of comprehension because of my medical conditions.
6.My precarious mental health.
7.The fact that the raising of such a large debt has exacerbated my mental health.
8.My struggle to meet necessary expenses.
Ms Rubach also provided medical certificates dated 11 May 2023 and 13 February 2024 from HELP Medical at Broadbeach. The author of the certificates is not identified albeit they are signed presumably by a doctor at the medical practice. Both certificates indicate she is suffering from:
‘… generalised anxiety and stress not sleeping properly and getting severe headaches and migraines as well as days she cannot work as a result. This has caused a lot of relationship stress and anxiety as well.’
She also provided a Statutory Declaration dated 16 December 2019,[6] which says:
‘I am writing to appeal my case. I have made multiple attempts to update my estimate and confirm that all Documents that were required were satisfied [supplied]. This was the question I asked on many of my phone calls. I can not remember word for word each phone call but I do know as my partners business grew busier I did increase the amount of my Taxable estimated income. I had been a single mum for many years and since commencing my relationship with my partner I have always provided centrelink with ample information regarding my new partner and his new business plus I've phoned centrelink to confirm that centrelink were satisfied with all the documents they requested. I am left quite baffled as to why now I have been sent a $32,000 Debt? Also due on 23^rd December. I do feel this to be very harsh and heartless – causing me many melt downs – being due 2 days before Christmas, as I have always thought I have done everything to satisfaction for Centrelink I really am left quite confused.’
[6] Exhibit 1, T6, page 463.
Importantly, Ms Rubach said at the hearing she always knew separate reporting was required for the benefits she received, yet it seems she did not do that. She said she reported her family income either online or by attending a Centrelink office. She said her only error was not retaining copies of the documents she submitted to the Ormeau office of Centrelink. There is no doubt Ms Rubach reported her income to Centrelink. The question is whether that reporting was accurate and timely. If not, the error is not solely that of Centrelink.
The Secretary’s Representative Mr Dube drew the Tribunal’s attention to ST13, page 88 which records Ms Rubach providing an income estimate of $12,800 for herself and $60,000 for her partner for the 2017/18 financial year. Ms Rubach disputes she provided these estimates. Mr Dube also drew the Tribunal’s attention to T17 page 653 which is a record of a phone call on 7 March 2019 by Ms Rubach to Centrelink in which she asks how to update her income for PPP purposes as she needs to report her partner’s earnings. She says this was not the first time she had requested this assistance as she had previously called, and attended an office of Centrelink, asking this question. She said this was to ensure she was reporting their income correctly.
She also says she received refunds of FTB after each year from 2016 to 2019 and wonders how she could not have reported her income correctly given those refunds. She provided copies of the letters she received as evidence of that, which are duplicates of copies included in the T-Documents at T5. In any event, even if she did receive refunds of FTB that does not absolve her of the requirement to report the combined income of her and her partner in the manner specified for the other benefits she received.
A constant theme of Ms Rubach’s evidence is she regularly reported her family income. She provided a document entitled ‘Reporting History’, which she says proves how many times she reported their income. That document is difficult to read and appears to show several reporting dates from 17 March 2015 to 8 December 2015 with a gap from then to 12 March 2019 and on to 20 November 2019. The gap from 8 December 2015 to 12 March 2019 is over three years and no explanation was provided for it.
Ms Rubach says she took profit and loss accounts for her partner’s business to the Centrelink office at Ormeau Hills and regrets not retaining copies of them. The Tribunal can accept some of these may not have been recorded due to human or system error. It cannot accept a gap of over three years, rather it suggests there was little or no reporting during this time.
Write-off of a debt
In passing legislation to provide social security benefits, Parliament intended to impose obligations to report, and when those obligations are not met, it cannot have intended for the Tribunal to exercise its direction to write-off or waive a debt in circumstances where the debt arose merely because there was a failure to report.
The write-off of a debt by Centrelink causes recovery action to cease, which may be for a defined period. At any time, the write off can be reversed and recovery proceedings can resume where circumstances change. Unlike a waiver (discussed later), write-off does not extinguish the debt.[7]
[7] Social Security Guide, paragraph 6.7.3.10.
As the ASFIC says at [61], Subsection 1236(1A) of the Act and s 95(1) of the Administration Act prescribe the circumstances in which a debt may be written off. These circumstances are if the debt is irrecoverable at law, or the debtor has no capacity to repay the debt, or the debtor’s whereabouts are unknown after all reasonable efforts have been made to locate the debtor, or it is not cost effective for the Commonwealth to take action to recover the debt.
There are no obvious circumstances for write-off of these debts because:
(a)The Tribunal has already found the debts are due to the Commonwealth so recoverable at law;
(b)Ms Rubach’s whereabouts are known; and
(c)It is cost effective for the Commonwealth to recover the debts from other social security benefits Ms Rubach may be entitled to meaning she has capacity to pay. The Tribunal notes she has already paid off most of the debts.
There is an exception to her capacity to pay the debts if she would suffer financial hardship as a result.[8] Ms Rubach asserts she should not have to pay the debts because she has already paid back approximately $51,282 and her family has gone without discretionary expenditure such as any holidays. Given she has already repaid that amount demonstrates she has capacity to pay the debt and holidays are, as she says, discretionary expenditure. The claimed hardship suffered because of foregoing a discretionary activity in order to pay a debt does not rise to the level intended by parliament to be sufficient for the waving of a debt. Further, her partner has income from his business which can assist with repayment.
[8] Section 95(4) of the Administration Act.
The Tribunal finds there are no grounds to write-off the debts due to the Commonwealth.
Waiver of a debt
Section 97 of the Administration Act deals with waiver of debts arising from administrative error. The Secretary must waive the right to recover the administrative error proportion of a debt that is attributable solely (emphasis added) to an administrative error if the debtor received the payments in good faith, and they would suffer severe financial hardship if it were not waived.
Alternatively, the Secretary must waive the administrative error proportion of a debt if the payments were made in respect of the debtor’s eligibility for family assistance in an income year. The debt must be raised after the end of the next income year or the period of 13 weeks starting on the day on which the payment that gave rise to the debt was made. Further, the debtor must have received in good faith the payment or payments that gave rise to the administrative error proportion of the debt.
Section 1237A of the Act also deals with waiver of a debt arising from an administrative error. The Secretary must waive the right to recover the proportion of a debt that is attributable solely (emphasis added) to an administrative error made by Centrelink, if the debtor (Ms Rubach) received in good faith the payments that gave rise to that proportion of the debt.
However, this section does not allow waiver of a part of a debt that was caused partly by administrative error and partly by one or more other factors (such as a failure of the debtor to report). Waiver under this subsection only applies if the debt is not raised within a period of 6 weeks from the first payment that caused the debt or if the debt arose because a person has complied with a notification obligation, the debt is not raised within a period of 6 weeks from the end of the notification period, whichever is the later.

In Sekhon v Secretary, Department of Family and Community Services [2003] FCAFC 190, the Full Court said at [35] of “solely” in s 1237A(1) of the Act:
‘The ordinary or usual interpretation of the phrase ‘attributable solely to’ is that it refers to the single or sole cause of the relevant act or event. The word ‘attributable’ means ‘capable of being attributed’. It involves an objective assessment of causation. The words ‘a debt attributable solely to an administrative error’ can be paraphrased as meaning that the only cause that objectively can be ascribed to the relevant debt is an administrative error …’
The obligation was on Ms Rubach to correctly report her family income, either by way of forward estimate for PPP or by annual reconciliation for FTB. Given the many examples provided by the Secretary in the ASFIC of the misreporting by Ms Rubach, the Tribunal considers it inconceivable there was no error by her in that reporting.
Ms Rubach says she did everything she understood she was to do in reporting her income. The Secretary says she did not act in good faith in accepting the payments of PPP, FTB and CCB. The Macquarie dictionary defines good faith as ‘honesty of purpose or sincerity of declaration’.
The Tribunal disagrees with the Secretary and finds Ms Rubach did accept the benefit payments in good faith. Whilst Centrelink does provide all social security recipients with copious letters and notices about their reporting obligations, the lay user cannot be expected to get everything correct every time. Ms Rubach has health issues as evidenced by the medical reports she provided, which would have inhibited her ability to get everything correct every time. Mistakes will be made and that does not mean payments are not accepted in good faith.
However, that does not avoid the requirement for the family income to be reported for each benefit received in the manner required for that benefit. It is not the role of Centrelink to contact its customers to check if they have correctly reported their income for each of the benefits they receive. That is for the customer to do and the numerous letters from Centrelink to Ms Rubach reminded her of her obligations.
Special circumstances
There are alternative provisions in the Act (s 1237AAD) and the Administration Act (s 101) which allows debts to be waived on the grounds of special circumstances where the debt did not result wholly or partly from the debtor or another person knowingly making a false statement or a false representation or failing or omitting to comply with a provision of the Act, the Administration Act or the antecedent Acts. There must be special circumstances (other than financial hardship alone) that make it desirable and more appropriate to waive than to write off the debt or part of the debt.
Another difficulty for Ms Rubach is her failure to notice the income reported to her by Centrelink was inconsistent with the amounts she says she reported to them. Maybe in her stressed state during these years, she simply did not notice and so did not raise the inconsistencies with Centrelink. She certainly raised this issue at the hearing for this review. The time to do that was along the way during the 2016 to 2019 financial years.
Special circumstances are difficult to define. Each case is judged on its facts and the broad test is those facts are to be unusual or uncommon to be special. The quote from Davy and Secretary Department of Employment and Workplace Relations [2007] AATA 1114 at [80] included in the ASFIC suns up the situation for Ms Rubach:
‘…“special circumstances” are not merely directed to the person’s own circumstances. Rather, they are directed to those that are “special circumstances…that make it desirable to waive”. That necessarily requires a consideration of the person’s individual circumstances but also a consideration of the general administration of the social security system. Waiver of the debt would mean that Mr Davy would have had the benefit of part of his DSP in circumstances in which he was not entitled to it…He has had the benefit of the money and there is no injustice in requiring him to repay the money of which he has had the benefit but not the entitlement…’.In Gizycki and Secretary, Department of Social Services [2015] AATA 382 the Tribunal discussed the meaning of ‘special circumstances’ where the Applicant’s social security payment was cancelled under section 95(1) of the Administration Act for failure to report under section 68(2) of the same. Deputy President Alhin noted in relation to analogous provisions of the Administration Act that:
In Beadle at 674, the Full Court said that “[t]he phrase ‘special circumstances’, although lacking precision, is sufficiently understood in our view not to require judicial gloss”. The word “special” in the context in which it is employed in s 95(2) of the Administration Act “is in essence instrumental, a direction to the decision-maker that the discretion it constrains is not lightly to be enlivened” (Boscolo at [18] per French J). For there to be “special circumstances”, the case must involve something unusual or different (ibid; Groth v Secretary, Department of Social Security [1995] FCA 1708; (1995) 40 ALD 541 at 545 per Kiefel J), but it need not be an extremely unusual, uncommon or exceptional case (Boscolo at [18], citing Secretary, Department of Social Security v Hodgson [1992] FCA 338; (1992) 37 FCR 32).
Special circumstances will exist where the cancellation of a social security payment by operation of s 95(1) is unfair or inappropriate or has unintended consequences (Groth at 545; Haidar v Secretary, Department of Social Security [1998] FCA 994; (1998) 52 ALD 255 at 264 per Hill J, citing Beadle at 673-674). In my view, s 95(2) of the Administration Act is an ameliorative provision which allows for the harshness of the automatic cancellation of a social security payment by operation of s 95(1) to be alleviated in appropriate cases involving special circumstances (see Haidar at 263-264 and Kirkbright v Secretary, Department of Family and Community Services [2000] FCA 1876; (2000) 106 FCR 281 at [22] per Mansfield J).
There have been a number of cases where the Tribunal’s discretion was enlivened in circumstances where it was clear from the evidence that the Applicant had a medical condition or other incapacity preventing them or making it too difficult to comply with their obligations.[9] Whilst the Tribunal accepts she has health issues as she describes in her submissions, the authorities indicate a high threshold to meet ‘special circumstances’ and Ms Rubach has not provided evidence of incapacity at the time she was required to report. Ms Rubach accounted for herself very competently at the hearing. Yet, Ms Rubach is not the only individual to experience the vicissitudes of life and the discretion to find special circumstances should not be interpreted in a way that derogates from the long standing principle: that there is a reasonable expectation that recipients of social security benefits have an obligation to advise the agency administering the relevant income support payment of changes in their circumstances which may affect their eligibility for a social security benefit, the dates of that eligibility, or the rate at which a benefit is paid.[10] The Tribunal finds her circumstances are not special for the purposes of the legislation.
It would be helpful if Centrelink were to upgrade their systems so that recipients of social security benefits could report their income once for all benefits they receive. The absence of such a system does not create special circumstances as all recipients are burdened with that shortcoming.
[9] See for example Archer-Morris and Secretary, Department of Education, Employment and Workplace Relations [2008] AATA 4; Kirov and Secretary, Department of Education, Employment and Workplace Relations [2011] AATA 50; Paoli and Secretary, Department of Social Services [2021] AATA 1703.
[10] Dauguet and Secretary, Department of Employment [2017] AATA 1554 at [33].
CONCLUSION
Ms Rubach found herself in the difficult circumstance of large debts due to Centrelink for overpaid benefits because she did not report her family income correctly and at the required time and in the required manner. That is not to say she did not report her income at all rather she didn’t do all that was required of her even though she believes she did.
There are no grounds to write-off her debts and the lack of sole administrative error by Centrelink or special circumstances precludes any waiver of the debts, most of which are now repaid.
DECISION
Pursuant to section 43(1)(c)(ii) of the Administrative Appeals Tribunal Act 1975 (Cth), the Tribunal sets aside the decision under review and in substitution finds the following are recoverable debts due to the Commonwealth:
(i) Family Tax Benefit in the amount of $2,423.22 for the 2016 – 2017 financial year;
(ii) Family Tax Benefit in the amount of $11,562.22 for the 2017-2018 financial year;
(iii) Child Care Benefit of $1,625.33 for the 2017-2018 FY;
(iv) Family Tax Benefit in the amount of $14,426.86 for the 2018-2019; and
(v) Parenting Payment Partnered in the amount of $41,890.70 for the period to 19 August 2015 to 19 November 2019.

I certify that the preceding 50 (fifty) paragraphs are a true copy of the reasons for the decision herein of Member P Ranson

.......................[SGD].........................
Associate
Dated: 9 October 2024

Date of hearing:

Date final submissions received:

13 May 2024

19 July 2024

Solicitors for the Applicant:
Ms N Markov
Services Australia

Respondent: Self-represented

Year/Period	Benefit	Debt ($)
2016/17	FTB	2,423.22
2017/18	FTB	11,552.22
2017/18	CCB	1,625.33
2018/19	FTB	14,425.86
19-08-2015 to 19-11-2019	PPP	49,377.86